C-peptide, a cleavage product from the processing of proinsulin to insulin, has been considered to possess little if any biological activity other than its participation in insulin synthesis. Injectin of human C-peptide prevented or attenuated vascular and neural (electrophysiological) dysfunction and impaired Na+- and K+-dependent adenosine triphosphate activity in tissues of diabetic rats. Nonpolar amino acids in the midportion of the peptide were required for these biological effects. Synthetic reverse sequence (retro) and all-D-amino acid (enantio) C-peptides were equipotent to native C-peptide, which indicates that the effects of C-peptide on diabetic vascular and neural dysfunction were mediated by nonchiral interactions instead of sterospecific receptors or binding sites. Tissue sorbitol levels were measured by GC/MS and were not affected by C-peptide.